BUSINESS confidence in the North-East fell six points during August to one per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Despite shrinking optimism over the economic outlook, companies in the North-East reported higher confidence in their business prospects at 13 per cent. Together, this gives an overall confidence of one per cent.

Businesses’ were evenly split on whether they would increase or decrease staff levels over the next year, compared to a net balance of four per cent that expected to hire more staff last month.

Across the UK, overall confidence slipped to one per cent, as businesses became less optimistic towards the economic outlook, while confidence in their own prospects fell to eight per cent.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Kelly Green, regional director for the North-East at Lloyds Bank Commercial Banking, said: “Overall confidence for firms is down in August but it is in line with the national average. What is encouraging though, is seeing confidence in business prospects on the up – defying the trend seen across the country.

“We’re by the side of businesses to help companies maximise the opportunities that emerge as we work together to navigate the uncertain environment.

“To underpin this, we’ve committed to lending up to £700 million in funding to North East firms this year, helping support future growth and success.”

Across the region, a net balance of 28 per cent of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, up 16 points on a month ago.

Businesses in the West Midlands showed the most confidence, at 15 per cent, ahead of the South West (11 per cent) and London (seven per cent).

Those in Scotland were the least confident, with an overall confidence of minus nine per cent, 10 points below the national average.

Across the UK, overall confidence slipped to one per cent, as businesses became less optimistic towards the economic outlook, while confidence in their own prospects fell to eight per cent.

In August, business confidence in the construction sector rose by six points to 12 per cent. Meanwhile, overall confidence fell by 16 points to three per cent in the manufacturing sector, and by 11 points to six per cent in retail, the lowest levels seen for those sectors this year. Confidence was also down 15 points to minus three per cent in the services sector, bringing it near to the February low of minus four per cent.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “We have seen a dip in overall business confidence this month, with firms appearing less positive about their own trading prospects and the broader economy, and remaining low against the historic average.

“While ongoing economic uncertainty is likely a key driver, it’s worth noting that companies’ assessment of the expected impact on their business of the UK leaving the EU has remained broadly unchanged this year.”